Hempalta

Overview

Hempalta Corp. (TSXV:HEMP) is engaged in processing industrial hemp at scale to produce a range of consumer and commercial products. Its proprietary processing technology, HempTrain, is capable of converting industrial hemp into high-volume, high-grade products. The company’s product range includes animal bedding, garden mulch and construction products such as hempcrete - a biocomposite material for construction and insulation made of hemp hurds and lime. Industrial hemp is highly versatile and can be grown in a variety of climates and soil conditions.

Perhaps the most important characteristic of industrial hemp is its ability to capture carbon dioxide in the atmosphere. One hectare of a hemp crop can absorb 10 to 22 tons of CO2 and is believed to be more efficient at carbon sequestration than forests. HEMPALTA is leveraging this hemp attribute as a new revenue stream and an opportunity to participate in the fast-growing carbon market, enabled by its acquisition of a controlling interest in UK-based Hemp Carbon Standard (HCS).

HEMPALTA owns 50.1 percent of HCS, which uses a science-based quantification methodology designed to measure carbon removal from industrial hemp accurately. The strategic investment in HCS - and through partnerships with industrial hemp farmers - positions HEMPALTA to become a leading carbon credit generator. The sale of these hemp-derived carbon credits offers a new revenue stream for HEMPALTA, in addition to its B2C and B2B hemp products. The carbon credit market is currently the largest opportunity for HEMPALTA. The global voluntary carbon market is projected to reach $2.68 trillion by 2028 at a CAGR of 18.23 percent. HEMPALTA anticipates realizing the first full cycle of carbon credit revenue by the first quarter of 2025.

The other key revenue stream for the company is from the sale of hemp products. Here again, the opportunity is large, with the global industrial hemp market projected to reach $16.75 billion by 2030. The company plans to introduce new products and expand its existing capacity to capitalize on this growing opportunity. Its plant expansion initiatives are focused on boosting capacity to effectively meet the increasing market demand. The change in the US Residential Building Code, approving the use of hemp-lime (Hempcrete), is a major tailwind. Hempcrete can now be used in one and two-family dwellings and townhouses in 49 of 50 US states. The company intends to focus on this product in its near-term strategy.

The company is led by seasoned and tested industry veterans with significant experience scaling businesses. The CEO, Darren Bondar, has a proven track record of scaling businesses and exiting them. He founded and built Canada’s largest recreational cannabis store network, Spiritleaf, and sold it for $131 million.

Company Highlights

• HEMPALTA is an agricultural technology company processing industrial hemp at scale. Industrial hemp is known for its sustainability, given its ability to absorb carbon dioxide (CO2) twice as efficiently as forests.
• HEMPALTA employs a proprietary processing technology called HempTrain™ to process industrial hemp to produce a range of high-value, environmentally friendly consumer and commercial products. These include biocomposite building materials, food preservation pads, pet litter, animal bedding and gardening products.
• The company’s consumer products are currently sold and distributed in over 150 stores and through e-commerce platforms in Canada and the U.S., with the goal of reaching more than 1,500 retail channels.
• In addition to industrial hemp products, HEMPALTA also offers carbon credits. The global voluntary carbon market is projected to reach $2.68 trillion by 2028, presenting a large opportunity for the company.
• The company owns a controlling interest (50.1 percent) of Hemp Carbon Standard (HCS), which is driving HEMPALTA’s venture into the carbon credits market. HCS uses a science-based quantification methodology designed to measure carbon removal from industrial hemp accurately.
• The industrial hemp industry is projected to experience growth as consumers and companies seek environmental and sustainable products. The global industrial hemp market is expected to reach $16.75 billion by 2030.

Key Segments

Carbon Credits

HEMPALTA is providing carbon credit solutions utilizing the carbon-negative nature of industrial hemp agriculture. The company partners with farmers to grow industrial hemp, which can absorb between 10 to 22 tons of CO2 per hectare. The ability of industrial hemp to absorb CO2 allows for the creation and sale of carbon credits on the voluntary market. Carbon credits can be purchased by companies looking to offset their emissions. This creates a revenue stream for HEMPALTA.

Once the farmers harvest hemp, the amount of CO2 absorbed by the crop is measured and verified using HCS’s technology. This step is crucial to accurately quantifying the carbon sequestration and determining the corresponding carbon credits.

HEMPALTA owns a controlling interest (50.1 percent) in HCS, which is a major advantage as it allows HEMPALTA to measure, report and verify the carbon credits. HCS is the only company in the world that can scientifically quantify and measure CO2 removal for hemp. HCS’s technology allows accurate measurement of CO2 sequestration in the biomass of the industrial hemp and related soil. HCS’s reporting ensures transparency and accuracy, thereby providing a solid basis for corporate buyers to make carbon credit purchases. The company estimates its partnership with HCS could result in over 1 million acres being measured, reported and verified for the creation of carbon credits that can be sold on the voluntary carbon credit market.

Industrial Hemp Products

HEMPALTA uses state-of-the-art processing technology, called the HempTrain, to produce a range of high-value, environmentally friendly consumer and commercial products using industrial hemp. These include biocomposite building materials, food preservation pads, pet litter, animal bedding and gardening products. These products are currently sold and distributed via offline and online channels. The products are present in more than 150 retail stores in Canada and the US, along with major e-commerce platforms. The goal is to reach over 1,500 retail channels.

Management Team

Darren Bondar – President and CEO

Darren Bondar previously founded and served as president and CEO of Inner Spirit Holdings, the first cannabis retail company listed on the Canadian Securities Exchange. Under his leadership, Inner Spirit expanded significantly until its acquisition by Sundial Growers in July 2021. Prior to that, he was the president and CEO of Watch It! and Comfortable Image, consumer retail and franchising businesses. Bondar holds a Master of Business Administration degree from the University of Alberta and a Bachelor of Arts degree from Western University. He has completed the financing, governance and compliance for public companies course at Simon Fraser University.

Candace Ryan – Chief Financial Officer

Candace Ryan brings over 15 years of experience in accounting, payroll, human resources, financial planning, and financial reporting and analysis. Previously, she served as financial controller for Spiritleaf, a subsidiary of Inner Spirit Holdings, listed on the Canadian Securities Exchange.

Adrian Stokes – Director

Adrian Stokes has over two decades of experience in financial services. He currently leads ADL Private Office in Monaco, a private family office for the majority partner of Fullbrook Thorpe Investments LLP. Previously, he held various roles at Barclays Wealth & Investment Management. He holds a double major in business from Greenwich Business School in London.

Craig Steinberg – Director

Craig Steinberg has been a director of HEMPALTA since August 2021. He is a practicing lawyer with Steinberg Law and is the designated mortgage broker for Fortius Mortgage Corporation. From August 2017 until July 2021, Steinberg served as a director of Inner Spirit Holdings which was listed on the Canadian Securities Exchange.

Dan Balaban – Director

Dan Balaban is the executive chair and CEO of Greengate Power Corporation, a Canadian renewable energy company. Before joining Greengate, Balaban co-founded and served as president and CEO of Roughneck.ca, which provides software solutions for the oil and gas industry. Earlier in his career, he worked as a management consultant at top-tier firms, including EY and PwC.

Liam Russell Wilson – Director

Liam Russell Wilson is the vice-president of business development with Prairie Merchant Corporation, a private investment company that focuses on real estate, energy, agriculture and sports franchises. He sits on the board of Indiva and continues to actively manage a portfolio of cannabis-related investments. Wilson holds a Master of Business degree from Queensland University of Technology.

Michael Ginevsky - Corporate Secretary

Michael Ginevsrky is a partner at DS Lawyers Canada LLP, where he focuses primarily on capital markets, mergers and acquisitions, corporate governance, and securities regulatory compliance. Ginevsky received a Bachelor of Commerce degree from the University of British Columbia and Juris Doctor from the University of Alberta. He was previously corporate secretary of Inner Spirit Holdings, a cannabis retailer listed on the CSE.